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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The difference between the monopolistic competition output Qmc and the output at minimum ATC. Excess capacity is underused plant and equipment






2. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






3. When firms focus their resources on production of goods for which they have comparative advantage






4. Es = (%dQs) / (%dPrice)






5. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






6. A good for which higher income decreases demand






7. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






8. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






9. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






10. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






11. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






12. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






13. Total product divided by labor employed. APL = TPL/L






14. Occurs when LRAC is constant over a variety of plant sizes






15. Exists at the point where the quantity supplied equals the quantity demanded






16. Models where firms are competitive rivals seeking to gain at the expense of their rivals






17. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






18. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






19. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






20. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






21. The mechanism for combining production resources - with existing technology - into finished goods and services






22. Ed = 8 - infinite change in demand to price change






23. The practice of selling essentially the same good to different groups of consumers at different prices






24. Ed < 1






25. Exists if a producer can produce more of a good than all other producers






26. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






27. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






28. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






29. The rational decision maker chooses an action if MB = MC






30. The total quantity - or total output of a good produced at each quantity of labor employed






31. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






32. ATC = TC/Q = AFC + AVC






33. The difference between total revenue and total explicit costs






34. The sum of consumer surplus and producer surplus






35. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






36. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






37. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






38. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






39. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






40. The ability to set the price above the perfectly competitive level






41. The additional benefit received from the consumption of the next unit of a good or service






42. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






43. Entry of new firms shifts the cost curves for all firms downward






44. Ed > 1 - meaning consumers are price sensitive






45. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






46. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






47. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price






48. Demand for a resource like labor is derived from the demand for the goods produced by the resource






49. AVC = TVC/Q






50. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply